Budget 2014 update: Company cars
The 2014 Budget continued the long-term trend to discourage employer-provided cars by confirming previously announced increases in company car benefit rates each year through to 2018-19.
The aim to encourage use of lower emission cars will see some significant differentials appear, for example with a 4% rise for 51-75g CO2/km cars in April 2015. The car benefit on a 145g/Km car was 20% of the list price in 2012-13, but will rise to 28% from April 2017. For quick one-off queries, consult HMRC’s car benefit calculator.
Fuel benefit and van benefit charges will also be pegged to retail price inflation from April 2015. Here are some of the other main elements announced in this year’s Budget, drawn from Rebecca Benneyworth’s TaxCalc-sponsored impact report. Download the full document for more advice, and a detailed table of the car benefit rates.
Other points to watch include:
- Fuel benefit – company cars and vans - The fuel benefit multiplier for 2014/15 was due to rise by 2% over inflation, which is likely to see it confirmed at £21,700. Both car and van fuel benefits will rise by inflation, using the September 2014 RPI inflation rate.
- Company vans - The fixed rate benefit in kind on company vans will rise by RPI inflation (using September 2014 figures) for 2015/16. The amounts will be confirmed before January 2015.
- Making good the private use of cars and vans - Where an employee repays the company for the private use of a car or van, the legislation will be amended so payments after the end of the tax year will not affect the benefit in kind for that year.